ALEXANDRIA, VA -- Visa, MasterCard and several major banks agreed to pay 7 million retailers more than $6 billion to settle an antitrust case over credit card swipe fees. The settlement of the lawsuit filed in 2005 is considered to be the largest in U.S. antitrust history.

The National Association of Convenience Stores, National Restaurant Association, and Kroger and Safeway supermarket chains, among other retail groups, alleged that card issuers and banks conspired to fix the fees stores paid for card acceptance. These fees average about 2% of the price of a purchase.

In addition to the monetary payment by Visa and MasterCard and major banks including JPMorgan Chase and Bank of America, the card companies have agreed to an eight-month reduction in the interchange rates -- or swipe fees -- that merchants pay card-issuing banks to accept credit cards. The proposed settlement would also give merchants the right for the first time to charge customers more for using credit cards.

NACS, which represents some 3,700 convenience stores and other companies, has already rejected the settlement announced on July 14, charging that it fails to address the core issue of how much control Visa, MasterCard and card-issuing banks exert over the merchants who accept their cards for purchases.

"Not only does the proposed settlement fail to introduce competition and transparency into a clearly broken market, it actually provides Visa and MasterCard with the tools to continue to shield swipe fees from market forces," said NACS chairman Tom Robinson. "This proposed settlement allows the card companies to continue to dictate the prices banks charge and the rules that constrain the market including for emerging payment methods, particularly mobile payments."

NRA said it is still reviewing details of the settlement. "However, we believe the historic nature of the settlement is evidence of a broken marketplace, in which actions taken by the major card brands and big banks have imposed tremendous costs on small restaurant owners across the country," the association said in a statement.

Mallory Duncan, general counsel of the National Retail Federation, which was not part of the lawsuit, speculated that other plaintiffs will likely follow NAC's lead in rejecting the settlement. "The money is significant but money is only temporary -- it's here today and spent tomorrow," she said. "What we need are changes in the rules that bring about transparency and competition that would be here for years to come."

Visa issued a statement explaining that settling the case is in the best interests of all parties. MasterCard said that while the company has "strong defenses to all claims," the settlement "avoids years of litigation and uncertainties that are inherent in such cases."

A judge must now approve the settlement. After considering objections to the proposal, he or she can accept it, reject it or ask the parties to renegotiate.

Separately, NACS, NRA and the National Retail Federation are among the trade groups that recently filed a lawsuit against the Federal Reserve, challenging the way the central bank implemented new restrictions on debit-card fees that are part of the Dodd-Frank financial overhaul law. | SEE STORY

Sen. Richard Durbin (D-IL), who authored an amendment to the law aimed at establishing "reasonable and proportional" debit card interchange price controls, supports the lawsuit, which accuses the Fed of failing to follow the law in carrying out this task. | SEE STORY